Greenwash vs. Brownwash: Exaggeration and Undue Modesty in Corporate Sustainability Disclosure

Corporate greenwashing has accelerated in recent years, bringing in its wake growing skepticism about corporate green claims. Although a theory of the drivers and deterrents of greenwashing has begun to emerge, it is static in nature and does not incorporate the full range of ways in which firms can misrepresent their environmental performance. Our contribution is threefold. First, we extend the theory of organizational information disclosure to incorporate the possibility of undue modesty about a firm’s environmental, social, and governance practices. Second, we hypothesize about the drivers of exaggeration and undue modesty based on which of a firm’s stakeholders are salient at a given point in time; to do…